Success speaks for itself

06 Jun, 2021 - 00:06 0 Views
Success speaks for itself

The Sunday Mail

In April this year, Floris Steenkamp, an investment analyst with South Africa-based Coronation’s Global Frontiers investment unit, made a very telling observation about the investment climate that has been created by the new political administration.

“There have been dramatic changes in the country over the past year,” he observed, adding: ”While we are not saying that the issues in Zimbabwe have been resolved, we think that people underestimate the significance of these developments and we suspect that the international investment community is completely unaware that management teams in Zimbabwe are the most upbeat they have been in years.”

It is also fair to say people really underestimate the significance of such a statement coming from a major fund manager.

Coronation is not a small company by any stretch of the imagination.

It currently manages funds worth R629 billion, or US$47 billion, so their word should surely count for something.

Since coming to power in 2018, President Mnangagwa made it clear that his ambitious plan to extricate the ailing economy and improve the standards of living of Zimbabweans was premised on ensuring that the country gets the maximum possible benefit from its impressive mineral wealth.

Achieving this is no small feat.

By their very nature, capital projects are capital intensive and have a long gestation period, which means investors, who have to commit for the long haul, have to be seriously convinced that they will recoup their investment.

Sceptics would have us believe that the new administration has abjectly failed in this quest.

A Bloomberg article by Antony Sguazzin on May 14, 2021 was particularly scathing and incredulous of the gains that have been made thus far.

“President Emmerson Mnangagwa’s administration has talked up about US$30 billion of investments in the country since 2017, yet there is almost nothing to show for it.

Finance Minister Mthuli Ncube boasts of lower government expenditure and slowing inflation, though it’s still 194 percent, and last month (April) embarked on an international roadshow to market the country . . . without clarity and policy certainty, luring foreign investment will be a struggle,” read part of the article.

But is this true?

A few examples might help.

Government has already made it clear that its plan for the mining sector includes attracting new investment, reopening closed and dormant mines and increasing production at existing operations.

In what is considered the biggest investment so far this year, Zimbabwe Stock Exchange (ZSE)-listed RioZim recently began a US$450 million underground mine development programme at Murowa Diamond Mine.

This will make it the biggest underground diamond mine in Zimbabwe.

The company has already invested US$50 million in expanding its processing plant at the mine.

Government has already granted the project national project status to make it easier for the investor.

Last month, gold miner Caledonia Mining Corporation began operations at its US$67 million Central Shaft at Blanket Mine (Matabeleland South), which is set to increase output from last year’s record of 1,6 tonnes to between 1,7 tonnes and 1,8 tonnes this year.

It gets better.

Production is further forecast to rise to 2,3 tonnes by 2023.

Guruve-based Eureka, which stopped operating in 2000, is set to be commissioned next month after another ZSE-listed company, Padenga, invested US$40 million to resuscitate operations.

It will sink another US$11 million to ensure the mine is fully operational.

Shamva Mine was already reopened last year, while How Mine and Redwing – which were previously under Metallon Gold – will be reopened soon.

These are just part of the activities in the gold sector.

The investments in the coal sector are well-documented.

In July last year, President Mnangagwa commissioned the 300 000-tonnes coke-oven battery at South Mining in Hwange after the company invested U$54 million to increase capacity.

Chinese company (ZhongXin Coking Company) ZZCC will soon be constructing a 180 000-tonne coke oven battery, while Makomo – which was recently awarded a contract to supply coal to Hwange Units 7 and 8 – will make a huge investment to increase capacity.

Another Chinese company, ZZEE, is in the process of constructing a new 450MW power station, among the many activities it is undertaking in Hwange.

The list is endless.

But perhaps the investment that would trump what we have seen so far is by Tsingshan – the world’s largest carbon steel producer – whose operations cover an iron ore mine in Chivhu, a US$1 billion steel plant and new smelters in Selous, among others.

The company, through its mining operation Dinson Colliery, has already completed a 300 000-tonne coke oven battery.

It is set to construct a new battery of the same capacity and begin constructing a power plant in November.

The scale and scope of these projects is simply mind-blowing.

Need we also mention Invictus, which is set to drill oil and gas exploration wells in October, or Arcadia Lithium Mine, which is set to begin production at its operation in the next few weeks?

If this is can be described as struggling to lure foreign investment, we shudder to think what attracting investments would look like.

This is why President Mnangagwa, buoyed by the positive developments in the sector, boldly asserted at the Chamber of Mines of Zimbabwe annual general meeting (AGM) in Victoria Falls on Friday that mining “continues to steadily gravitate towards the attainment of its goal of a US$12 billion mining industry by 2023 through greenfield and brownfield investments”.

Zimbabwe is clearly and demonstrably on the move.

Share This:

Survey


We value your opinion! Take a moment to complete our survey

This will close in 20 seconds